British manufacturing shrank for a second successive month in March as
companies scaled back production, leaving the services sector as the best
hope of avoiding a fresh recession.

The Markit/CIPS manufacturing purchasing managers' index came in at 48.3, only slightly above February's shock reading of 47.9, and a touch weaker than the consensus forecast. Any number below 50 denotes a contraction.

Rob Dobson, senior economist at Markit, said that the data indicated that the manufacturing sector remained a drag on the broader economy.

During the fourth quarter of last year, manufacturing accounted for a third of the economy's 0.3pc contraction.

“The onus is now on the far larger service sector to prevent the UK from slipping into a triple-dip recession," said Mr Dobson.

"The ongoing weakness of manufacturing and the hard to estimate impact of bad weather on first quarter growth suggest that this is still touch-and-go and that any expansion will be disappointing nonetheless."

David Noble, chief executive of the Chartered Institute of Purchasing and Supply, said that the manufacturers' "winter of discontent" had extended into March, with continued weak demand at home and abroad and increased costs "conspiring against the sector".

"UK manufacturing exports have been hit directly not only by the problems in the eurozone, but also by strong competition overseas," he added.

"Despite demand in the US and South Asia, competition for contracts is tough and British manufacturers are increasingly struggling to peak in these markets."

There were also signs that inflation pressures were picking up. Output prices rose at the fastest pace in three months while input prices picked up sharply, driven by the weakness of sterling and higher energy and food costs.

Manufacturing accounts for around a fifth of British economic output. Surveys of the construction and service sectors for March are due to be released on Wednesday and Thursday respectively.

There have been signs that the services sector is faring better than manufacturing. It grew at its fastest pace in five months in February, according to Markit and official data showed it notched up its best performance in January for five months.

However, evidence so far suggests a strong risk that Britain will record a second consecutive quarter of contraction - the technical definition of recession - when official GDP data for the first quarter is released on April 25.